Here's why Verizon's CEO lowered the bar for nationwide 5G

Verizon remains on track to launch 5G nationwide sometime in 2020. But, according to the operator's CEO, don't expect much from the offering, at least at first.

"In the beginning you're going to see some improvements. Over time: Dramatic improvements," Hans Vestberg said Tuesday at a J.P. Morgan investor conference. "In the beginning, it's going to be small."

Vestberg explained that Verizon expects "some difference" between nationwide 4G and nationwide 5G. "But we all need to remember how technology works," he continued, explaining that 4G networks in 2010 provided top speeds of 20 Mbit/s, but today those speeds can reach above 100 Mbit/s. Vestberg indicated Verizon's nationwide 5G service will improve in the same way.

"We feel that it is so important that when we come up with something it's high quality and high performance," he said, adding that "we already have one of the best 4G networks in the world, so that's what you compete with."

Vestberg's hedging is essentially an acknowledgement that the operator cannot possibly offer the same kinds of blazing-fast 5G speeds it offers in some downtown areas on a nationwide basis. But that the operator still needs to have some kind of nationwide 5G strategy. Indeed, AT&T executives offered similar cautionary remarks before the operator launched its own lowband 5G service.

This is pretty revolutionary in the wireless world because, in every other G, operators had to simply allocate chunks of spectrum to new generations of wireless technology. That means operators, amid a network transition, would have to dedicate a 5MHz slice of spectrum to 3G and a 5MHz slice of 4G, even if most customers were still on the old 3G network. Now, with DSS, operators will be able to basically share that full slice of spectrum between 4G and 5G, ensuring that none of their network capacity goes to waste.

However, this will still create challenges for Verizon. That's because Verizon's current 5G network works on heaps of completely vacant millimeter wave (mmWave) spectrum. There are no 4G users on that spectrum, so Verizon can dedicate all of its highband, mmWave spectrum to 5G. Verizon's mmWave 5G network can support blazing-fast speeds beyond 1 Gbit/s.

Preparing for Apple's 5G moment
That may be fine for now, but that's not going to cut it in the fall when Apple is expected to launch its 5G iPhone. "It is going to be a moment when Apple decides to have a 5G phone. That is important," Vestberg explained.

Thus, in order to expand its 5G signal nationwide, Verizon plans to use DSS to transmit 5G signals in its 4G lowband spectrum holdings (which can cover wide geographic areas) in addition to its existing highband 5G network in mmWave spectrum. But, as Vestberg indicated, 5G working in lowband spectrum, even with DSS, simply can't support the same kinds of speeds that highband, mmWave 5G can provide.

T-Mobile, for example, quietly admitted this fact when it cautioned that its own lowband 5G network is only 20% faster than its 4G network. Verizon, seeking to show off its mmWave 5G, quickly pounced on T-Mobile by boasting of tests showing that its 4G network sometimes provides faster speeds than T-Mobile's lowband 5G network.

Now, though, Verizon is stuck in the same position that T-Mobile faced last year: It set a high bar with 5G in mmWave spectrum, but now it wants to take 5G nationwide and can only do so using slower, lowband spectrum.

The DSS debate
T-Mobile's network technology chief, Neville Ray, caused a stir earlier this year when he warned of troubles – likely involving Nokia – around the development and deployment of DSS.

When questioned on the topic last week, he reiterated those concerns. "Do I feel a lot better? Not really," Ray said during T-Mobile's quarterly conference call with analysts. "I was very clear on that call [in February] that one vendor is trailing and they're still kind of trailing. So I think the sum of it is, DSS is going to happen. We've heard from our competition and similar to us, something will happen this year. But the key message is, we're not dependent on DSS for our 5G rollout."

Despite Ray's comments on DSS, Verizon officials have maintained that their plans are still on track. But the way Vestberg has phrased Verizon's DSS rollout plans is strangely awkward: "Our technology team are progressing on that," Vestberg said Tuesday in response to questions on DSS. He said Verizon's network team will have DSS ready when Verizon's commercial team decides to turn the technology on. But he didn't say when that would happen.

Regardless of which executive within Verizon flips the DSS switch, there's little doubt that Verizon's nationwide, lowband 5G won't be able to provide anywhere near the speeds that Verizon's highband, mmWave 5G network is providing today. And though speeds on Verizon's lowband 5G network will undoubtedly improve in the months and years to come, the operator will probably need more spectrum – such as midband C-Band spectrum – to offer significantly faster 5G speeds on a nationwide basis.

After all, a recent Google study indicated it would take roughly 13 million transmitters and $400 billion to deliver 100 Mbit/s to a large portion of the US population using 5G in mmWave spectrum, due to the propagation characteristics of signals in the spectrum.